AirAsia may force local carriers to rework strategy

The entry of AirAsia and other foreign partners is certain to pose challenges to local low-cost carriers such as SpiceJet and IndiGo. AirAsia's foray comes at a time the airline industry is in turmoil with passenger traffic sliding. The number of passengers in fact shrunk 7.3% in November on a year-on-year.

The suspension of operations by Kingfisher has benefitted both Jet Airways and low-cost carriers. This is reflected in their break-even seat load factor, a measure of the minimum capacity needed for an airline to make profits. After the grounding of Kingfisher, Jet's India break-even seat load factor improved to 73% in the December quarter from 82.2% in the June quarter.